Things to Avoid While Purchasing a New Home
What's more fun than buying a bunch of new furnishings to go in your future home? Not much. But buying big ticket items before your loan closes could be trouble. Until your loan closes, there still remain some hoops to jump through. Here are some things to refrain from during the home buying process to assure your transaction goes smoothly.
Don't overspend on big-ticket items You may be itching to turn your new kitchen into a home magazine cover, or celebrate your new castle, but keep away from major purchases like furniture, jewelry, appliances, or vacations until the loan closes. You may send up red flags with your lender if you buy new appliances on your credit cards in the middle of your loan process. Using cash to buy expensive items can even be a bad idea: many banks consider your available cash when approving your application.
Don't go on a career search. Your recent career history should show stability. Getting a new job before you start the application process for a loan may not jeopardize your approval at all. However, switching careers during the loan process could influence whether or not you are approved.
Don't take your accounts to a new bank or move around your money. As your lender considers your mortgage loan package, you will probably be required to submit bank statements for the last two or three months on your saving and checking accounts, money market funds and other liquid finances. Your lender looks for a consistent flow of your funds each month, in order to avoid fraud. Even for practical purposes, moving around cash or changing banks may make it harder for the lending institution to confirm your account history.
Don't hand over a "good faith" deposit directly to the seller in a FSBO (for sale by owner) purchase. Your good faith deposit does not belong to the seller: it remains yours until closing. Your good faith funds are to go toward your expenses closing; some FSBO sellers may not know this. An attorney or other type of neutral party can hang onto your earnest money, or you may put it temporarily into a trust account until you close. If your transaction fails, the contract with the seller should document where this earnest money should go.
Rasmussen Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 608-592-5600.